The App-a-Month Challenge
I’m sure you’ve had occasional ideas for a startup. Your excuses probably include “I don’t have the money or time” and “It’s a big gamble. I already have a steady job now.” I know because I’ve said the same things. Recently, I spoke to several entrepreneurs who introduced me to world of minimum viable products (MVP). If your dream is to start a pizza restaurant, you start today. Set up a weekly pizza night and make pizza for your friends. It’s not your full-fledged expensive dream, but you’ll learn a lot of the challenges and understand your customers by starting small. Your friends may say your pizza is like any other pizza, so you try a unique truffle pizza idea. Now they invite their friends and rave about this night. People are asking if you are selling your unique pizza. Through an MVP, you’ve tweaked your idea to prove it works. Now, pouring money into a pizza restaurant is less risky.
Based on this concept, I began a new challenge for myself — create an app a month. I’m doing this with the minimum viable product concept, which means that the app doesn’t have to have all the bells and whistles. It just needs provide a useful service and include a method to measure its success (website analytics, a paid premium version, etc). It’s a little like hackathon, but instead of a day or two, we’re working with a month.
That seems time-consuming, right? I wasn’t going to quit my full time as a lawyer. When starting out, I had recently started a weekly improv class, hosted a weekly programming night, and begun training for a tough mudder. I had a life too — that month included some travel plans and a number of BBQs and other events. I had my doubts on the timeframe, but ultimately, it was doable. Below is my journey and the lessons I learned along the way.
Making a Business
Before getting started, I spent a full month slowly doing some of the administrative prep work for the whole App-a-month challenge. I decided to make this into a legitimate business because once you start creating products, there’s always a chance you might infringe on others’ rights or get sued, no matter how safely you play it. I don’t want my personal savings account involved in any mess like that.
If you’re starting a business, you might be interested in the process and costs, as well as my product choices to make the business run.
Starting an LLC
First, I started a new company to protect myself from liability. It’s called Missing Wilbur LLC (I picked an arbitrary name to avoid Trademark issues). It cost $220 in DC. Most states are in that same ballpark, with the exception of NY where an LLC costs closer to $2000. It was really painless and would take less than an hour even for a non-lawyer. The hard part is determining whether to start an LLC vs. a corporation, which state to incorporate in, and whether to form as a series LLC. This is where my law degree paid off. For others, there’s no generic answer to this question. It depends on the type of business and your needs. So I would highly recommend speaking to a lawyer about what to incorporate as, because it can be difficult to switch if LegalZoom leads you in the wrong direction. You can perhaps save money by doing the filing yourself.
For now, all my apps will fall under this LLC. If one of them happens to get successful, it can spin off into its own company.
Financial Tracking
I opened up a bank account and researched tax and accounting options. I already had an account with Wells Fargo — they require $50 to open a business account. If you maintain an average of $1000 in the account, they charge no monthly fees. I was also offered a credit card with a pretty low limit, which I took.
After some research into accounting software options, Xero seemed like a good choice (it appears to be the new, techy version of QuickBooks). That costs between $6.30 and $30/month. Xero has a 6-month reduced cost version. It’s unclear whether the lowest tier ($9/mo) or the mid tier ($30/mo) would best fit my needs. My business could sign up closer tax season since I expect to have very few transactions in the first few months.
For a pass-through tax entity like a single-member LLC, the business owner normally claims the business taxes on their personal taxes. I found that H&R Block Schedule C account would be $110/year for this option. That’s the cost for both a federal and state e-filing. That would replace my current tax filing system.
Capitalization
I made a spreadsheet of my estimated expenses. I researched hosting for the web site and estimated it’ll take roughly $30/month per app through Heroku. Google apps costs $5/month per person to maintain a business gmail account and the suite of Drive products. Each web domain is $12/year through GoDaddy or Google Domains. All considered, I estimated a couple thousand would be way more than sufficient to capitalize all these projects and help prevent courts coming after my personal accounts (“piercing the corporate veil”).
Operating Agreement
Most LLCs have some sort of operating agreement that lays out how each partner will interact with the business, including shares, dividends, contributions, and roles. It’s extremely important if you have multiple owners. I recommend doing this after you take of the financial moves above because you often need to write your financial contributions into the document.
As a single member LLC, I still drafted a simplified version of this document. One of the core benefits for single-member LLCs is to help formalize your capitalization. It essentially says you’ve contributed x dollars in exchange for 100% of the Missing Wilbur LLC. To continue adding more money down the road, I added a provision saying I’ll provide a credit line, to be determined on an as-needed basis.
Technical Prep
At the same time of starting my business, I looked into the easiest way to do this challenge from a technical perspective. I have not made web or mobile apps yet, aside from Wordpress sites. After some research, it seems the easiest way to accomplish an app a month is through Ruby on Rails. I have some experience with Ruby but none with Ruby on Rails. So I asked my Rails friends, what’s the best way to get started? They all recommended this tutorial: https://www.railstutorial.org/book. I read through it, but didn’t do any of the exercises yet. I took notes and figured applying Rails would be part of my first month’s challenge.
At the time of writing, I already finished my first app. Read about the making of FitMyCal!
